WEW, Westing Group AG, delivers home decors and accessories on its online platform. The platform is available globally, and it is a leader in textiles and furniture.
We researched this dynamic company to discover if it is a good investment, considering its past performance, especially with its share price gain of 858%, and whether the results are sustainable over the long run.
We also look at some alternatives in the German market, one in a similar industry and another a good German Household company to consider.
As traders, we always seek the ideal company to trade, offering growth potential and sustainable performances. But is WEW, WestWing Group AG a good investment? Over the last quarter, the share price increased 42%, but this might not reflect the long-term trend. We believe that the market is mainly focused on revenue and growth for now. However, WEW does show many positive attributes for us to consider. Ultimately, the company has seen some considerable growth in earnings, but analysts expect future earnings to shrink. So, we did some research to determine if WEW can maintain its performance over the long run.
Features;
- WEW increased by 858% in only 1-year, and the price increased by 42% during the last quarter.
- WEW demonstrates a strong momentum due to fundamentals, which inevitably drive the stock prices higher or lower.
- ROE is a great indicator to discover how effectively a company can generate revenue and future earnings.
- WestWing Groups, ROE is weak compared to the industry standard at 9.1%.
- WestWing’s net income growth is relatively high, with the industry standard at 4.1%.
- Looking at a few alternatives, we can do more research to discover if they are the right fit for our trading strategy and risk tolerance.
WEW 858% share Price Gain
The main point of investing in a particular stock or asset is to achieve spectacular returns; finding a big winner in the bunch can improve your finances. The share price of Westwing Group AG increased significantly by 858% in only 1-year. It is also great to see that the price was up by 42% in the last quarter. It is good to be aware that businesses generally develop over the long run, so the returns that WEW has provided may not reflect the long-term trend. But it is always good to see a company performing like this one, which will undoubtedly leave the company extremely proud.
As traders, we will recognize that fast revenue growth that is maintainable can often lead to fast profit growth. WEW did indeed make a loss over the last 12 months, but this could be down to investors being more focused on revenue and revenue growth.
As investors, we are always cautious when the share price increases so much. Over the last 12 months, WEW’s revenue grew by 42%, which is a reasonable growth rate. The share price gain was 858% during the previous year, so we decided to take a closer look at WestWing Group AG.
WEW In More Detail
WestWing group delivered an 858% return for its shareholders during the last year. But the recent results are less than impressive than the long-term returns, delivering only 42%. This could be down to the market awaiting fundamental developments in WEW before pushing the price higher or possibly lower. It is essential to look at the share price over the long term to get a more objective view of performance.
WEW Strong Momentum
As traders, we are already aware of WEW performance over the last year, skyrocketing to 858%. As we all know, the fundamentals usually guide the price movements over the long term, so we did some research to discover if WestWing Group’s key financials may have determined its significance in recent price movements. For this analysis, we concentrated on WEW’s ROE.
What is ROE?
The return on equity is a great tool to discover how effective a company can generate returns received by its shareholders. It is mainly used to assess the profitability of the company concerning its equity capital.
Why is ROE Important?
We have already confirmed that ROE is an effective profit-generating tool for the company’s future earnings. This mainly depends on how much of the company’s profits decide to reinvest or retain; we can then establish the company’s earnings growth potential. Ultimately the higher the ROE, the better, and profit retention reflects a higher growth rate of a company than companies not bearing these characteristics.
WEW Earnings And ROE
The company’s ROE is 0.8%, and it looks weak. If you compare it to the industry average of 9.1%, then the company’s not that remarkable. On the positive side, we can see WEW has had net income growth of 14% during the last five years. It is believed that other aspects are influencing the company’s positive earnings growth. If you look at the company’s incredibly low payout ratio, it could be managed extremely efficiently by the company.
Another great thing to see is that WEW’s net income growth is relatively high compared to the industry average of 4.1%.
When you analyze a stock, earnings growth is a crucial metric to consider when valuing a stock. It is always important to know if the company’s expected earnings growth will increase or decline. This will ultimately determine whether the stock has a bright or bleak future ahead of it. A good indicator to use is the P/E ratio as a tool for expected earnings growth; it determines the price that the market is willing to pay on a given stock and is purely based on its earnings prospects. So, you may want to discover if WestWing Group has a high P/E ratio or lower P/E ratio relative to the industry.
WEW Alternatives
Although WestWing Group AG has many positive attributes for further investigation, we may want to consider other alternatives to analyze further. So, we have included a company in the same sector and another top-performing German Household Stock for you to look at.
home24 SE (ETR: H24)
Home 24 has developed into a leader in online furniture supplies in Germany within a few years. As with most e-commerce companies, it was sponsored by Rocket Internet, with a few others, as investors. The company has been trading on the German Stock exchange since 2018. Rocket Internet is now a minority shareholder. In addition to its e-commerce platform, it also has ten outlet stores in major cities.
Home24 SE has a revenue turnover of 372 Million Euros per year. The 3rd quarter of 2020 had a 54% increase in revenue growth and a 13%-point profitability improvement. The company plans to upgrade its guidance for 2020, with currency-adjusted revenue growth of approximately 38% to 42%. The company’s growth is mainly driven by new and existing customer engagement. The company’s order intake had increased by 45%, with momentum staying positive at approximately a 60% increase.
Home24 is a company to analyze further, with revenue growing at 19.1% over the last five years, and revenue is forecasted to grow by 20.52% each year. But you also need to consider that the share price has been highly volatile over the last three months. But we believe this is one you might want to take a look at for further investigation.
Beiersdorf (ETR: BEI)
The company is a leader in personal care products, including adhesive plasters and leading skincare brands.
The company has a revenue of approximately $6.08 Billion per year, with a market capitalization of $22.29 Billion. Also, there is an excellent P/E ratio of 39.81, making it ideal. You may want to compare this to the industry standard. The stock is under the German Household Stocks ticker symbol (ETR: BEI).
Considering the expected yearly growth, it is around 10.9% per year, fairly stable. But if you compare the stock to the German market, the company’s revenue is 4.95 per year compared to 15.5% per year. The good news is that the earnings are expected to grow, but not significantly.
Beiersdorf is a less volatile stock, but growth could be limited. You will want to do further research to discover whether it fits with your trading strategy and goals.
Conclusion
The analysis indicates that WEW has many positive attributes, demonstrating a high rate of reinvestment. Even though its ROE is not impressive, there is still considerable growth demonstrated with its earnings. However, if you look at the analyst’s ratings, they expect future earnings to decrease.
The increase in WEW could come down to several factors: investors being more focused on revenue and revenue growth or waiting to discover more fundamental data to decide whether to increase or decline the price.
If you consider the net income growth, it is relatively high compared to the industry average of 4.1%. The company must be proud of the performance over the last year, and it is always good to see a company perform so well.
When we looked at a few alternatives, we discovered more German Listed stocks to consider. But investors must do further research to determine what stock is the right fit for their trading style and risk tolerance. WEW demonstrates many positive attributes for us to consider, and some that are to be avoided altogether. Either way, you will discover whether WestWing Group is a good investment.
